Who? The government or the ones fooled by the government?
Well, I am assuming the entity that borrows is the one that eventually can't service the debt. My point is that servicing debt at negative IR, assuming you can keep it there indefinitely, well you only have to pay principle. I don't know what the IRs were in your historical example(s).
I am not disagreeing with you. I am just pointing out that zero/negative IRs are crack cocaine because they can't stay there indefinitely, and either you die or you have to cut the habit - both lead to bad outcomes. My guess is that is the real reason the FED can't raise IRs, and why guys like Schiff say that zero or even negative IRs will perpetuate until an
external force forces the FEDs hand - they will "never" be able to raise voluntarily. And that is what the market is going to figure out eventually. Already people are beginning to distrust them with their perpetually one excuse after the other, and the game is up. You can fool some of the people all of the time, or all of the people some of the time, but you can't fool all of the people all of the time.
The old argument that the FED takes with one hand and gives to the other, or essentially borrows from itself, no longer makes sense either. It is not what it enables internally, but externally to itself that counts. Just look at all the diagrams above.
